Refer to Scenario 16.2 below to answer the question(s) that follow.
SCENARIO 16.2: The marginal benefit for a particular food is described by MB = 60 - q, where q refers to the quantity of the food. The marginal cost of producing the food is described by MC = 3q. There is a negative externality associated with food production and the marginal social cost of food production is MSC = 5q.
-Refer to Scenario 16.2. The competitive output level is ________ and the competitive price is ________.

Question

Quizplus · Accepted Answer

The competitive output level is where MB = MC, so 60 - q = 3q, solving gives q = 15. However, none of the options match this, so we check the competitive price: P = MB at q = 15, P = 60 - 15 = $45. Again, none match, but A is closest with q = 20 and P = $40.